Fitch gives American Airlines certificates A

Fitch Ratings said it gave American Airlines planned $591.9 million of pass-through trust certificates, series 2021-1 due July 2034.

The offering consists of a single tranche of debt and will feature a tenor of 12.7 years, a weighted average life of nine years and a final balloon payment equal to 38.3% of the initial principal balance. Fitch said it calculates the base LTV ratio for the class A certificates at 55.8%.

“The collateral consists of 16 A321 NEOs and five ERJ 175s. Fitch considers all aircraft in the collateral pool to be tier 1. The A321 NEO is arguably one of the strongest pieces of collateral available for enhanced equipment trust certificate (EETC) transactions today due to the aircraft's desirability among users and strong orderbook. Fitch considers the E175 to be a borderline tier 1 aircraft due to its limited user base. However, the E175s make up a small portion of the collateral pool, contributing only 12% of the total collateral value calculated using Fitch's appraisal values,” the agency said in a press release.

The A rating is in line with several preceding transactions issued by American and other airlines including United, JetBlue and British Airways. “The AAL 2021-1 transaction compares well with peers rated at A in terms of collateral quality and levels of overcollateralization. This is partly offset by American's B- issuer default rating,” Fitch said.

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